Incentive programs – a good idea or a recipe for problems? The vast majority of employers today recognize that good pay and benefits are simply not enough to attract, hire and retain good people. This is why incentive programs continue to gain in popularity and have produced positive results. If asked, many employees will say they are motivated by money but numerous studies have shown that, at best, the impact of money on performance is short-lived and the same can be said about incentive programs, many offer things such as free lunches, casual days, free breakfasts, as well as other freebies aimed at keeping employees happy, focused and productive. The problem, however, is that, overtime, incentives are seen by employees as entitlements and lose their intended impact. Well intentioned incentive programs that are not carefully considered or properly implemented can do more harm than good.
The answer isn’t necessarily to do away with incentive programs, but to think through the desired results to make sure employees understand why the incentive is being offered and for how long. Incentive programs should always be framed around the results they are intended to reward, recognize or generate in terms of sales, productivity or customer service. Additionally, clearly defining a duration period for the incentive program helps prevent entitlement issues from arising. One problem that often occurs with incentive programs that are based on measurable objectives or outcomes is that those measurements are vague or unclear. So employees may perceive the offered incentives as unattainable, which can cause the incentive program to backfire and have a negative impact on morale and productivity.
At any given point, the leadership of an organization must be able to assess whether or not a particular incentive program is warranted. In order to do that, the following questions should first be considered.
• What achievements is the proposed program attempting to elicit, or what behaviors does the organization want to promote?
• Do employees perceive the program’s goals as being realistic and attainable? Does the program have a well-defined life span so that it has the intended impact but does not become an ongoing entitlement?
• Are the program costs in terms of dollars and manpower within reason when calculated against the projected results or objectives?
The bottom line is that studies prove that for any business, incentive programs can pay substantial dividends, conversely, they can also create significant and unnecessary turmoil.